UK HOUSEBUILDER Crest Nicholson is to return to the stock market nearly six years after it was taken private at the height of the housing market crash.
The 50 year-old company, which builds homes mainly in the south of England, said it plans to raise £50m from the listing of new shares to pay down debt. Its owners also hope to sell £150m of their existing shares.
The offer is expected to value Crest at around £500m, restoring the housebuilder to the FTSE 250, where it traded before its takeover in 2007.
Crest said it expected the free float to be a minimum of 35 per cent of the issued share capital and that the offer will be completed in February.
Chief executive Stephen Stone said the offering – the first of a UK company this year – is a sign of confidence in the UK housing market.
“We think the equity markets are good at the moment. Housebuilders have shown modest improvements in trading over the last six months in particular on the back of the government’s Funding for Lending Scheme,” Stone said.
He added: “Crest has got a land bank in the southern part of England with strong margins of 18 per cent. So a land bank, good returns and a sign of a pick-up in the mortgage market are all ingredients we think will be good for shareholders going forward.”
Crest, one of UK’s biggest house builders, was hit hard by the slump in the UK housing market after years of easy credit inflated prices.
It was taken private by Scottish entrepreneur Tom Hunter and mortgage lender HBOS in 2007 and is now majority owned by US distressed investment fund Varde Partners, after a series of deals last year.
Crest also reported it had made a pre-tax profit of £62.1m in the year to 31 October, compared to a £27m loss in 2011. Sales rose 28 per cent to £408m with completed homes up 24 per cent at 1,882.
BARCLAYS Capital and HSBC are acting as joint sponsors, joint global co-ordinators and joint bookrunners on Crest Nicholson’s initial public offering. Derek Shakespeare, a managing director at Barclays’ investment banking division, is leading the effort for the bank. He recently advised Redrow founder and chairman Steve Morgan’s vehicle Bridgemere and fund manager Tosca on their bid to take over the housebuilder, which was eventually scrapped. Shakespeare has also advised Lufkin, the US oilfield pumping equipment provider on its $127m acquisition of Scottish oil services provider Zenith Oilfield Technology in March 2012.
He is joined by Chris Madderson, part of the bank’s UK origination team and Ben West in the equity syndicates team.
HSBC’s advisory team was led by Nick Donald, head of equity capital markets (ECM). Donald’s previous deals include acting as joint bookrunner for miner Lonmin on its $817m rights issue in November and he also advised packaging company DS Smith on its £466m rights issue in February last year to buy Swedish rival SCA Packaging.
Simon Cloke, head of diversified industries at HSBC and ECM director Stuart Dickson worked with Donald on the deal.